Summary of the March Meeting of the Emerging Issues Task Force
This EITF Snapshot summarizes the March 12, 2026, meeting of the Emerging
Issues Task Force (EITF or “Task Force”). Initial Task Force recommendations are
summarized by the FASB staff in an agenda decision memo for the Board’s discussion
at a public meeting. On the basis of such discussion, the Board determines whether
to add a project to the FASB’s technical agenda and votes on all substantive
decisions (including a cost-benefit analysis). The Board then directs the staff to
draft a proposed Accounting Standards Update (ASU) for a vote by written ballot.
These decisions are expected to be made at a single meeting. After the FASB approves
the draft proposed ASU, it is exposed for public comment. When the comment period
ends, the FASB considers the comments received; redeliberates the issues at a public
Board meeting; and, ultimately, issues a final ASU.
The official EITF meeting summaries are posted to the
Deloitte Accounting Research Tool
(DART) and to the FASB’s Web site. EITF meeting materials (released before the
meeting and used to frame the discussion) are also available on those sites.
Issue — “Mortgage Servicing Rights — Recapture”
Status: Agenda decision reached.
Affects: All entities.
Background: At its September 2025 meeting, the EITF Agenda Committee added
a project to its agenda to clarify the unit of account for mortgage servicing
rights (MSRs) — specifically, whether the ability to solicit borrowers of the
underlying serviced loans for refinancing and, as a result, recover economics
through servicing of the new loan (“recapture”) should be accounted for as part
of an MSR or as a separate intangible asset. The EITF deliberated this issue at
its March 12, 2026, meeting.
MSRs may be retained (for example, when an entity sells mortgage loans but
retains servicing) or acquired (purchased from another entity). The market
generally ascribes value to recapture, and that value is often reflected in
prices paid for MSRs.
The issue summary highlights diversity in practice related to
how entities reflect recapture in MSR measurements — particularly (1) whether
recapture is excluded entirely from valuation models and (2) when recapture is
included, whether it is explicitly or implicitly included in the valuation. ASC
860-501 requires that servicing assets be
initially measured at fair value but does not provide specific guidance on what
elements or features are included in that servicing right.
At this meeting, the EITF deliberated the merits of five issues, largely focusing
on the unit of account. The issue summary indicates that the Task Force
considered the following alternatives during these deliberations:
a) Alternative A1: One unit of account. This alternative
would specify that the MSR and recapture are a single unit of
account. As a result, recapture would be included in the measurement
of the MSR. [Footnote omitted]
b) Alternative A2: Two units of account that are accounted for
separately. This alternative would specify that the MSR and
recapture are separate units of account that must be accounted for
separately. Therefore, recapture would be excluded from the
measurement of the MSR. [Footnote omitted]
c) Alternative A3: Two units of account that are combined as a
single asset for financial reporting purposes. This
alternative would specify that the MSR and recapture are separate
units of account that are combined into a single asset for financial
reporting purposes, if recapture qualifies for recognition as an
asset under GAAP. This alternative assumes that amounts paid for
recapture in an acquired MSR are recognized as an intangible asset,
and as a result, recapture would be included in the measurement of
an acquired MSR. [Footnote omitted] In contrast, recapture would not
be included in the measurement of a retained MSR because the
relationship that provides the servicer with the ability to
recapture is internally generated in a retained MSR and internally
generated intangibles are not recognized as assets under GAAP.
In addition to the unit of account, the EITF deliberated whether:
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To define recapture.
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The scope of this issue should apply to residential MSRs or all servicing rights recognized under ASC 860-50.
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The amortization guidance should be amended “to require an entity to include estimated future net servicing income from refinanced loans.”
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An entity should be required “to disclose how it determined the value attributable to recapture.”
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The proposed changes should be required for all entities.
Summary: At its March 12, 2026, meeting, the EITF made the following decisions:
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As noted in the meeting summary, the EITF voted 9 to 1 in favor of Alternative A1, recommending that “an MSR and recapture be treated as a single unit of account and, therefore, that the fair value measurement of an MSR include the effects of recapture.”
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EITF members unanimously recommended to:
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Not define recapture.
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Apply the proposed changes only to residential MSRs.
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Not amend the current amortization guidance related to MSRs.
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Not require any additional disclosures (i.e., the current disclosure requirements are sufficient).
-
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EITF members also unanimously recommended that the proposed changes be required for all entities.
Certain EITF members observed that, if the FASB adds this project to its
technical agenda, the FASB staff should consider a modified prospective approach
that permits the inclusion of recapture in the fair value measurement of all
recognized MSRs as of the adoption date with a cumulative catch-up adjustment,
thereby avoiding the need to maintain two valuation approaches for existing and
newly recognized MSRs.
Next Steps: The FASB staff will prepare an agenda decision memo for the
Board to discuss, at a public meeting, whether to add the project to its agenda.
The memo will include the materials addressed by the EITF, a summary of the
EITF’s discussions, the basis for the EITF’s recommendation, and an analysis of
the FASB’s agenda criteria.
Footnotes
1FASB Accounting Standards
Codification (ASC) Subtopic 860-50, Transfers and Servicing: Servicing
Assets and Liabilities.